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10 Investment Banking KPIs That You Must Learn

Investment banking has laid its ground in the 19th century. From then on huge number of banks have registered themselves to offer services that prevail in the bull and bear markets. Many banks came up with various types of services to offer customer satisfaction. Investment banks are also divided into many types for smooth functioning. With the establishment of so many banks and growing competition, clients sometimes face conundrums about which bank to plump for. Here comes the KPI for rescue. This article will scrabble about investment banking KPI.


KPI is the success pillar for every investment bank, firm and organization. The indicators are the data that decide the performance of the banks. It also aids the banks in tracking their performance area. How much the bank has improved and how much more it needs to improve depends upon the KPI. The KPI helps to maximise the profit of the organizations. But how? How does KPI boost the achievement of investment banking? How it helps to gain maximum clients is what the article has to talk about. The parameter of investment banking KPI is very important for it’s the bank’s success. Let us chalk out the important aspects of investment banking KPI.

Brief Description of KPI

Key Performance Indicators or KPIs are the deciding elements in any organization be it any sector. Here we will discuss the KPI of investment banking. These elements help investment banks measure their performance or success based on certain criteria. The success is measured compared to its benchmark.

Various types of investment banks have their performance indicators that measure their performance. The elements that help in deciding the key indicators are the business operations of the banks, the service offered to its customers, the process the bank follows to achieve its goal and what efforts the bank has taken to achieve its goal. The success of investment banks depends on how many clients they have served, their profits and how many services they have offered.

The investment banking KPI not only help the banks to count on their profits, but it also helps to understand the places to improve. This data gives the banks a clear picture of which segments need improvement, the sectors that performed well, segments that the company should be concerned about and the overall performance of the banks. These indicators serve the banks to grow in a better way in future so that they get the best outcome.

The indicators of the investment banks determine the bank’s customer satisfaction growth as well as the internal process growth. They provide almost accurate data on how the investment banks can focus on these things and help themselves grow.

Overall, the most valued performance indicators for the organization are growth in revenue, revenue earned per client, profit margin, retention rate of clients and satisfied client rate. These factors aid in indicating the bank’s performance.

This was a brief description of KPI. Hope the concept of KPI and what it does is clear before we move to the next interesting aspects of KPI.

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Classification of KPI

KPI can be classified or categorized into many types. This classification may be because of the types of banks, their operations, services provided and number of clients handled. The article will discuss the four important investment banking KPIs. They are as follows.

Strategic KPI

These types of KPIs are used to share high levels of information. The high-level information involves the overall performance of the banks, returns on their investment, the profit of the bank and the revenue generated by the bank. These KPIs are used by the executive and upper-end employees to provide the bank with its specific data as per requirement.

Operational KPI

 As the name suggests these indicators help the banks to achieve their goal towards its operational development. It is a time-concentric indicator. It helps in determining how much time the company is taking to conduct its operations. This can be yearly, monthly, weekly or daily. It tells the banks which operations of the banks are going on the right track and which operational segments need a boost.

Functional KPI

These indicators help the investment banks to decide about their functional aspects. They indicate which function or stream takes the maximum time to conduct an operation. Like, how the operations are going on in the finance stream or marketing sector.

Leading or Lagging KPI

In this type of indicator, the data is analysed. The data notifies some changes that are about to be welcomed or something that has already been done. It indicates the leading factors and the factors that are caused due to lagging.

These are the four factors that help in determining the performance of investment banks in four different aspects. When the report is generated based on these aspects it will help to see the performance of the investment banks and decide on what needs to be done or the improvement measures to be taken by the investment banks for better and more efficient functioning.

Factors that Develop KPIs in Investment Banks

Some reasons affect the selection of KPI. KPIs are selected based on the bank types, its profit, its goals and its customers. KPIs vary from sector to sector. The financial sector KPI is different from other sectors like Human Resources, Information technology, Marketing and Sales. Let us look at the factors that help in developing the KPI of investment banks.

  • Deciding the purpose of the KPI. As we have seen above KPI can be customer-centric and process-centric. A goal should be regarding the business objectives and its other necessities.
  • Time is an essential factor. The time required for a particular function is an important factor of success.
  • The collection of required data and correct data will help in analysing the performance in a better way.
  • Select appropriately the factors that will help to decide the KPI. As already discussed earlier, the KPI decide a lot of the nitty-gritty of the company. So, the company should be careful what exactly it wants.
  • After deciding the KPI, the target of the KPI should be fixed. This means, what outcome the company needs out of that data should be clear.
  • After all the data is received, the report should be prepared. This calculation of reports should be accurate to analyse the results.
  • Finally, the report should be analysed and presented. The report analysis should be done very carefully so that it gives a clear image of the overall performance of the company.
  • The KPI should be reviewed regularly be it monthly or quarterly, so that the investment banks should be aware of their performance track. It also helps them understand whether they are aligned with their goals. The bank can delegate responsibilities to its employees for better and more effective work transitions.

These are some of the factors that help in the development of the investment banking KPI. These factors are essential to know as they also tell us how to make or decide the KPIs.

Till now we have studied the key indicators of investment banking and how it is developed. The next part of the article will discuss, the ten most important indicators that help investment banking to boost its performance.

10 KPIs of Investment Banking

The ten major investment banking KPIs are important for investment banks to attract customers and also to weigh their position in the competitive market.

Let us check out some of these KPIs that are important for the investment banks and investment banking sectors.

1. Current Ratio

It is also referred to as the liquidity ratio. It measures the investment bank’s capacity to pay out all its financial commitments for a short-term period or a year.

This helps the investors know about the financial bank’s assets and financial position. A high liquidity ratio may show that the bank has too much of assets that it is unable to invest in. This ratio helps in understanding a firm’s current assets to its current liabilities.

The Current Ratio is Calculated as:

Current Ratio = Current Assets/Current Liabilities

Usually, the current ratio of 1.5 to 3 is healthy. This ratio indicates that the bank is in good condition.

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2.     Customer Retention Rate

Customer retention rate is the most important investment banking KPI. Here, the retention rate of the customer is valued.

It shows how well the investment banks can properly maintain the relationship with their customers. How many loyal customers does the investment bank have? It also reveals the performance of the banks towards its customers. The services they have offered to their clients, how well their queries are solved and the number of businesses their existing customers have provided them.

The Retention Rate of the Customer is Calculated as:

Customer Retention Rate = ((Number of customers at the end of the period – Number of new customers during the period) / Number of customers at the start of the period) * 100

The customer retention rate is observed for a particular period. A 90% customer retention rate is ideally considered as a good percentage for the investment banks.

3. AUM Growth Rate

Asset Under Management or AUM is the element that investment banks manage on behalf of the clients. It measures the value of the assets in total that it manages for its customers. AUM growth rate is the rate that counts the growth or decline of AUM in the investment banks.

The AUM growth rate is an important investment banking KPI. Looking at this rate chart the clients of banks decide how many customers it can get and how many of them they can retain over a time frame.

The Aum Growth Rate is Calculated by the Following Method:

AUM growth rate = (Ending AUM over a period – Beginning AUM over a period) / Beginning AUM * 100

This factor helps the investors know about the investment bank’s marketing performance and the skills to attract customers and it also helps to know the client’s choices and what they want. An AUM growth rate of 5 – 7% yearly is considered a good service for investment banks.

4. Return On Investment

ROI or Return on Investment is another important indicator for investment banking. ROI is that factor, which revolves around the investment banks.

This factor helps in measuring the profits earned from the investment made. It is the measurement of the profits made for a period.

The ROI is Calculated by:

ROI = (Net Gain from Investment – Initial Investment) / Initial Investment

The profit generated from the investment depends on how much investment is made, for how much time and other relevant features. The average ROI of investment banking can vary from 5% and 10%. The percentage between this range is considered as a good score by the investment banks.

5. Customer Acquisition Rate

The customer acquisition rate is a vital aspect of the investment banking KPI. This helps to boost the performance of the investment banks.

The customer acquisition rate helps in understanding how many clients the investment bank acquired over some time. This helps find out if the customers are interested in the bank and its services offered. New customers can be acquired by the bank’s better performance towards their customers.

The Customer Acquisition Rate is Measured in the Following Manner:

Customer Acquisition Rate = (Number of new clients acquired / total number of clients at the beginning of the period) * 100

The benchmark for the customer acquisition rate may vary depending on the types of banks, and services they provide to their customers. Usually, boutique banks have lower rates compared to middle-market banks. The bulge bracket banks can have a 10% average customer acquisition rate.

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6. Revenue Generated per Customer

The revenue generated per customer is the calculation of the profit that the investment banks receive from each one of its customers.

This data helps provide the investment bank with a picture of what services the clients want and what services make them feel valued. This also shares the data on how many potential customers exist in the bank and how much profit they are giving to the investment banks.

The Revenue Generated Per Customer Can Be Calculated as:

Revenue generated per customer = Total revenue earned / Number of customers served.

The revenue generated depends on the number of customers and what services are offered to the customers by the investment banks. The bulge bracket banks generally maintain $10,000 to $30,000, Middle market banks have $5,000 to $ 15,000 and Boutique banks are contented with $1,000 to $5,000 revenue per customer.

7. Market Growth Rate

The market growth rate is an inevitable factor in the investment banking sector. The market growth rate holds a strong concern in investment banking KPI.

This aspect helps in determining the growth of the market. It helps in measuring how much more and how less the market will grow in the near future. By knowing a rate, the investment banks can prepare themselves for future situations. They can amend their ways as required to keep up their space with the market flow.

The Market Growth is Calculated as:

Market Growth Rate: ((Current Market Size – Original Market Size) / (Original Market Size)) * 100

There is no specific benchmark for market growth and how much improvement the investment banks should make to keep up with the market growth. The banks should be well aware and well prepared for any type of market conditions.

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8. Net Profit Margin

Profit margin means the profit obtained by an investment bank in proportionate to its revenues. It tells the bank’s overall profit for a period. It is a major investment banking KPI for the investors to know how the bank is performing.

The net profit margin shows the investment bank’s profit after excluding its expenses, taxes and interest payments.

The Net Profit Margin is Measured as Such:

Profit Margin Net = (Net Profit / Total Revenue) * 100

Though many factors like the size of the investment banks and services offered by the investment banks affect net profit margin score usually, 20% of profit margin is considered a good score for the investment banks.

9. Customer Satisfaction Ratio

The investment banks deal with the customers. The satisfaction of the customers is what they aim for. So, the customer satisfaction ratio is very much required investment banking KPI.

This scorecard helps in determining how satisfied the clients are with the service of the investment banks. This ratio is important to the clients as they can decide which bank is top-rated by the customers. The bank can also observe and work on the customer’s needs and requirements to gain more customers.

The Customer Satisfaction Ratio is Quantified as:

Average Customer Satisfaction Ratio = (Sum of all the scores of each question) / (total Number of questions)

To get the scores the banks conduct surveys. They request their customers to respond to the customer satisfaction survey for the better performance of the banks. The higher the score, the better the performance. In the United States, 7.8 out of 10 is considered a good score.

10. Investment Accounts Opened

This aspect is also a unique way to increase the performance of investment banks. It is also a way to get more customers. More customers bring more business to the investment banks.

In this method, the new investment accounts opened by the investment banks are measured. It takes into consideration how many new accounts are opened over a specific time.

Here we sum up with types of investment banking KPIs. Hope this information proved knowledgable and valuable for your professional goals.

The Measurement of Investment Accounts Open is:

Investment Accounts Opened = Total number of new investment accounts opened for a specified time.

This gives a clear picture to the investor of how many new clients have opened their accounts in the banks. This also increases the bank’s profit. There are no benchmarks for this criterion. The more the new accounts opened, the better the investment banks gain.

These are some of the KPIs that the bank should follow to boost its performance level. These indicators will make them aware of future situations and will also assist them in making necessary changes that are vital and required to prevail in the competitive world.

Why KPI is Required?

Investment Banking KPIs hold a remarkable position in the growth of investment banks. These indicators help the investment banks to make vital decisions and steps for their better profitability and better futuristic performance.

  • The indicators help the investment banks to measure their overall performance during a specified time.
  • These aspects help the banks to stay ahead of the competition
  • These aspects give the banks a chance to see where they are lagging and take the required measures to improve themselves.
  • They can track the trends of their clients and identify what their clients need from them.
  • The investment banks will be able to make better decisions based on the figures that the indicators provide.

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1.      How to calculate the KPI?

To calculate KPIs the investment banks need some of the vital components like data from surveys, interviews etc, measuring formulas, and target of the performance level for the timeframe and frequency of the KPI.

2.      Is there process oriented KPI?

Yes, KPI can be customer as well as process-oriented. Process-oriented KPI measures the functions and operations related to the investment banks.

3.      Are KPIs important?

Yes, KPIs are important for investment banks to measure their overall performance.

4.      Can market conditions influence KPI?

Yes, market conditions can influence KPIs. The market conditions can influence the investment banks. They can bring a lot of changes in the decisions of the investment banks.


The investment banking KPI is a very important aspect to consider for any investment banker. These indicators are like mirrors. They show the banks where they stand and how they are. Based on these figures and accurate data the investment banks can decide on which factors to consider. The performance indicators are a boon to the investment banks which boosts their outcome.

Passion for writing contents, blogs and novels, has motivated Aritra Bose to pursue her career in content writing from IIM Skills. She is eager to explore her journey as content writer and work with an organization where her communication, creativity, adaptability, research work, SEO knowledge and organization skills are utilized and enhanced. Prior to this, Aritra gained 5+ years of experience in HR and Marketing profile, with KONE Elevators, HPE, GAVA Ecocrete and ICICI Bank. She has completed her MBA in HR and Marketing from KIIT University. Her hobbies are reading, content creating in YouTube, cooking and travelling.

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